A substance trapped inside IC packages that enables them to function
(also called blue smoke; this is
similar to the archaic phlogiston
hypothesis about combustion). Its existence is demonstrated by what
happens when a chip burns up — the magic smoke gets let out, so it
doesn't work any more. See smoke test,
let the smoke out.

Usenetter Jay Maynard tells the following story: “Once, while
hacking on a dedicated Z80 system, I was testing code by blowing EPROMs and
plugging them in the system, then seeing what happened. One time, I
plugged one in backwards. I only discovered that
after I realized that Intel didn't put power-on lights
under the quartz windows on the tops of their EPROMs — the die was
glowing white-hot. Amazingly, the EPROM worked fine after I erased it,
filled it full of zeros, then erased it again. For all I know, it's still
in service. Of course, this is because the magic smoke didn't get let
out.” Compare the original phrasing of
Murphy's Law.